Sharp is considering expanding capacity at a factory for small to mid-sized liquid-crystal display panels, with the bulk of the output to be used in Apple's iPhone, the Nikkei business daily said.

Apple will shoulder the bulk of the investment in the Mie Prefecture plant in central Japan, where Sharp already produces small and mid-sized panels, the paper said.

The Nikkei said Sharp would start installing equipment next year and mass production is expected to begin in the latter half of 2012. Sharp has previously supplied LCD panels for Apple's iPod touch music player, the paper said.